Decentralization and Avoiding Deforestation: The Case of Indonesia

Fitrian Ardiansyah, Frank Jotzo

    Research output: Chapter in Book/Report/Conference proceedingChapter

    Abstract

    Indonesia has undergone far-reaching political, administrative and fiscal decentralization over the last decade. Significant powers now rest with the district level including the management of natural resources and the environment. A large share of state revenue goes to district governments. Deforestation has been a part and parcel of Indonesia’s economic development and it is the principal source of Indonesia’s large greenhouse gas emissions. Indonesia has committed to curb its greenhouse gas emissions, mostly through reduced deforestation. We assess challenges and options for avoiding deforestation under the decentralized system, using Indonesia’s fiscal transfer system. We find that schemes for improving land management and deforestation need to be structured around the interests of local governments and actors. Positive incentives for local governments will need to be created to compensate them for foregone profits and to facilitate alternative development. This could be done through intergovernmental transfers, using either outcome-based or input-based payment schemes.
    Original languageEnglish
    Title of host publicationFederal Reform Strategies: Lessons from Asia and Australia
    Editors Howes, S. and Rao, M. Govinda
    Place of PublicationNew Delhi
    PublisherOxford University Press
    Pages273-300
    Edition1
    ISBN (Print)9780198092001
    DOIs
    Publication statusPublished - 2013

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